Businesses say they're raising prices on goods unaffected by tariffs, according to surveys and anecdotes released by the Federal Reserve on Wednesday.
Why it matters: This could be a sign that price hikes might be more widespread than expected, with concerns that some companies might use tariffs as cover to unnecessarily raise costs.
How it works: About 110 manufacturers and more than 200 service firms in the New York and New Jersey area were surveyed during the first week of May.
- That's before tariffs on China were reduced from 145% to 30%, and before the boomerang court decisions that invalidated the tariffs before temporarily reinstating them.
- 90% of manufacturers, and three-quarters of service firms, said they import some goods, and are exposed to higher tariffs.
By the numbers: About three-quarters of firms said they were fully or somewhat passing along tariff increases to customers.
- About half of companies reported a decrease in their bottom line due to tariffs. Some have reduced headcount.
- "A significant share" said they raised prices of goods and services unaffected by tariffs — a way to spread higher costs across inventory, or to take advantage of their customers' expectations that prices are rising --AXIOS
Keep in mind this is the same thing that actually happened the first Trump trade war.
Businesses, and yes those non tariff made in America businesses will not forgo an opportunity to raise prices in a tariff environment.
